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Money Matters Thought Leadership

Proactive financial steps to keep you ahead of this economic storm

Spending less and sticking to your financial game plan will serve you well once these clouds lift 

Preparation is the key to success — and that applies to your finances, too.

As the economic winds shifted over the past few months, Americans have largely met the situation with assurance, avoiding panic and instead taking proactive steps to secure their finances.

“As soon as I saw inflation creeping up and talks of a possible recession, I dusted off my financial plan, started tracking my spending even more carefully, and began looking at where my family and I could trim expenses,” said Derek Applegate, 48, of Silver Spring, Md. 

Simply put: Americans are anticipating turbulent economic weather ahead — and they’re coming prepared. 

In Primerica’s most recent quarterly survey of middle-income households across the U.S., more than three-quarters (77%) of respondents say it’s likely the nation will be in a recession by the end of the year.

But they haven’t just been sitting around waiting for it to happen. Instead, the vast majority have taken immediate action to secure their finances, doing everything from cutting back on eating out, trimming streaming services, putting off home renovations and other major expenses, or even looking for a higher paying job. 

“My wife and I are putting off our kitchen remodel due to inflation, supply chain issues and a possible recession. We’ve also started packing our lunch and carpooling to the kids’ events to save where we can,” Mr. Applegate said. 

Still, there’s more work to be done. 

While more households say they want to spend less money, they’re actually spending more. More than one-third (37%) of respondents indicated they plan to spend less in the next few months. However, about the same percentage (36%) reported having spent more money in the past year — and that number was up significantly from our last two surveys. 

And while a majority (54%) still feel positive about their personal finances, that percentage has trended downward over the past year. Additionally, three-quarters (75%) say their income is falling behind the cost of living, a sharp increase since our first poll of the year.

“Even though my family has spent less on non-essentials this past year, I don’t think it’s made much of a difference due to higher costs of groceries, gas and other necessities,” Mr. Applegate said. “I’m considering consulting with a financial professional to see what else I should be doing to stay ahead.”

Turbulent economic times don’t need to be met with a gloom-and-doom attitude — and the current one even provides a ray of hope as the job market remains strong.

Markets and the economy behave in a cyclical fashion. We’ve been through rough economic waters before, and our boat always makes it out to the other side. 

What you need to weather the current storm is a steady hand on the wheel and a trusted map to help you navigate the choppy waters. Here are some key tips to get you started. 

  • Keep putting the same amount into your retirement account if you can swing it: As tempting as it may be to downsize your 401K contribution, it’s best to stay the course. The market will rise once again, and you don’t want to miss out when it does. It is a good idea, however, to look at where your money is going and rebalance it based on your current risk tolerance and near- and long-term goals.
  • Consider additional work to help close the gap: Unlike previous downturns, the job market remains strong and there is high demand and decent wages for part-time or hourly workers in all sorts of industries. That may be why 42% of respondents — including those who are currently retired — say they plan to pick up another job to help with their financial situation.
  • Get advice from a financial expert: The mostly stable U.S. economy of the past decade means many Americans are experiencing a downturn of this scale for the first time. A financial professional can give you personalized tips no matter your level of income or stage of life. That advice could be just what you need right now to fully secure your financial future.
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